New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter IV - Sales And Use And Other Miscellaneous Taxes
Subchapter A - Sales And Use Taxes
Part 529 - Exempt Organizations
Section 529.1 - General

Universal Citation: 20 NY Comp Codes Rules and Regs ยง 529.1

Current through Register Vol. 46, No. 12, March 20, 2024

Tax Law, § 1116

(a) Except as otherwise provided in this Title, any sale by or to any person or organization described in this Part or any amusement charge to such a person or organization where it is the purchaser, or any use or occupancy by any such person or organization is not subject to the sales or use tax imposed by article 28 or authorized by article 29 of the Tax Law. Any sale, amusement charge, use or occupancy by or to any person or organization who or which does not qualify for exemption pursuant to the provisions of this Part may qualify for exemption as described in other provisions of this Title.

(b) Any person or organization other than:

(1) New York State;

(2) any of New York State's agencies, instrumentalities, public corporations (including a public corporation or compact with another state or Canada);

(3) political subdivisions of New York State;

(4) the United States of America;

(5) any of the agencies and instrumentalities of the United States of America; or

(6) diplomatic missions, diplomatic personnel and foreign government-owned enterprises and agencies as described in section 529.5 of this Part;

must establish with the Taxpayer Assistance Bureau its exempt status before it is entitled to any of the exemptions mentioned above. Diplomatic missions, diplomatic personnel and foreign government-owned enterprises and agencies described in section 529.5 of this Part must establish their entitlement to any such exemptions with the United States Department of State or, in the case of certain employees of the Coordination Council for North American Affairs, with the American Institute in Taiwan. The burden of proving that a person or organization is entitled to exemption rests with the person or organization.

(c) States of the United States and their agencies and their political subdivisions, other than New York State and its agencies and political subdivisions, do not qualify for exemption.

(d)

(1) Any person or organization claiming exemption from tax must furnish its vendor with documentation substantiating its right to the exemption claimed before it may purchase exempt from tax. Generally, diplomatic missions, diplomatic personnel and foreign government-owned enterprises and agencies described in section 529.5 of this Part must also display to the vendor at the time of purchase their tax exemption card or other documentation evidencing entitlement to exemption, if any, as issued by the United States Department of State or the American Institute in Taiwan. In addition, the billing must be made directly to the person or organization and paid for from the funds of such person or organization, except as otherwise provided in this Title. Any transaction which is not supported by proper documentation is subject to tax at the time of purchase. See Part 532 (Collection of Tax) of this Title.

(2) Taxes paid by any person or organization which, at the time of the sale upon which tax was paid, would have qualified for exempt status pursuant to the provisions of this Part, are refundable; provided, however, in the case of diplomatic missions, diplomatic personnel and foreign government-owned enterprises and agencies, the provisions of section 529.5 of this Part govern under what conditions and how a refund may be obtained. This will be true even if the taxpayer had not received certification of its exempt status from the Taxpayer Assistance Bureau at the time of the transaction. A claim for refund must be submitted within the period of limitations set forth in section 534.2(b) of this Title. However, when a person or organization is required to amend its documents or change its operations in order to qualify for exemption, the organization will not be entitled to a refund of taxes paid on purchases prior to the effective date of the amendment or change.

Example 1:

An organization consisting of past and present members of the Armed Forces of the United States received an exempt organization certificate from the Taxpayer Assistance Bureau on February 1, 1984. On the same date, the organization applied for a refund of sales taxes paid during the past three years. During this three-year period the organizing documents and operations of the organization did not change. During this period 75 percent of the organization's members were past or present members of the Armed Forces of the United States, but less than 75 percent were war veterans. The organization is entitled to a refund of taxes paid on and after June 26, 1983, but not of taxes paid prior to that date. Prior to the amendment of section 1116(a)(5) of the Tax Law, effective June 26, 1983, the organization would not have qualified for exemption from sales tax.

Example 2:

A nonprofit organization formally organizes on September 1, 1988. Upon applying for an exempt organization certificate, the organization is informed by the Taxpayer Assistance Bureau that in order to qualify for exempt status it must amend its organizing documents to provide for distribution of its assets for one or more exempt purposes upon dissolution of the organization. On September 1, 1989, the organization amends its organizing documents to provide for such a distribution of assets. Its application for an exempt organization certificate is granted by the Taxpayer Assistance Bureau on December 1, 1989. The organization may claim a refund for taxes paid on and after September 1, 1989, the date its organizing documents were amended. Such a claim would have to be filed within three years from the date the taxes were payable to the Department of Taxation and Finance by the vendor who collected the taxes from the organization, in accord with section 534.2(b) of this Title. The organization may not receive a refund of taxes paid prior to September 1, 1989, since prior to amending its organizing documents it did not qualify for exempt status.

(e) Documentation substantiating an exempt transaction must be retained by the vendor for at least three years following the date the transaction was required to be reported to the Department of Taxation and Finance. See Part 533 (Vendor's Obligations) of this Title.

(f) The exempt status of an organization may be revoked for any reason constituting misuse of the exemption granted, or if it is discovered that the organization's application contained misleading or deceptive information, or if the organization has changed its purposes, activities or organizational structure without notifying the Taxpayer Assistance Bureau as provided by section 529.7(g) of this Part.

(g) An officer, employee or member of any organization described in this Part may not make tax exempt purchases or sales for the benefit of a nonexempt private entity. For example, an officer, employee or member of an organization described in this Part who, pursuant to law, acts in the capacity of a receiver to rehabilitate or liquidate a nonexempt private entity or who purchases tangible personal property or services with the funds of the nonexempt private entity is not an agency or instrumentality of the organization described in this Part with respect to the exemptions from the sales and compensating use tax.

(h) Any person or organization described in this Part that is a promoter of a flea market or similar type show must comply with the provisions of section 533.1(d) of this Title.

(i) Any person, as defined in section 1101(a) of the Tax Law, who by reason of an unauthorized use or misuse of an exemption certificate, fails to pay any tax due is liable for the tax due and penalty and interest thereon. Any person willfully filing or causing to be filed a false exemption certificate may be subject to the criminal penalties prescribed by section 1817 of the Tax Law and the Penal Law. See Part 536 of this Title.

Cross-reference:

For transactions involving maintenance or improvement of real property of organizations described in section 1116 of the Tax Law, see Contractors, Part 541 of this Title; for provisions relating to the purchase of automotive fuel by organizations described in section 1116 of the Tax Law see Automotive Fuel, Part 560 of this Title.

(j) The provisions of this subdivision apply only to those persons or organizations described in: sections 529.4 (relating to the United Nations or other international organizations); 529.5 (relating to diplomatic missions, diplomatic personnel and foreign government-owned enterprises and agencies); 529.6 (relating to health maintenance organizations); 529.7 (relating to religious, charitable, scientific, testing for public safety, literary and educational organizations, and organizations for the prevention of cruelty to children or animals and organizations which foster amateur athletics); 529.8 (relating to organizations consisting of past or present members of the Armed Forces of the United States); 529.9 (relating to certain Indian nations or tribes); and 529.10 (relating to rural electric cooperatives) of this Part.

(1) An exemption granted to an organization under section 501(c) of the Internal Revenue Code does not automatically exempt the organization under section 1116(a) of the Tax Law.

(2) A person or organization other than diplomatic missions, diplomatic personnel and foreign government-owned enterprises and agencies described in section 529.5 of this Part is required to submit an application and supporting documents to the New York State Department of Taxation and Finance, Taxpayer Assistance Bureau, in order to establish exemption. Diplomatic missions and diplomatic personnel described in section 529.5 must obtain the appropriate tax exemption card or other documentation evidencing entitlement to exemption from the United States Department of State or American Institute in Taiwan in order to establish exemption. Foreign government-owned enterprises and agencies described in section 529.5 must obtain the appropriate tax exemption documents from the United States Department of State in order to establish exemption.

(3) When a person or organization applies for exemption and does not submit the information requested in order to establish that they meet the criteria for exemption, the department will not issue a determination on the exempt status until the application is complete and all the information requested has been supplied.

(4) Where the department issues a determination denying or revoking an exemption, the person or organization whose exempt status was denied or revoked is entitled to a hearing, provided a petition requesting a hearing is submitted to the Division of Tax Appeals within 90 days from the date that the denial or revocation notice was mailed.

Cross-reference:

Protest Procedures, see section 529.11 of this Part.

(5) The information submitted on the application and supporting documents are relied upon by the department in determining whether or not a person or organization meets the criteria for exemption. The willful filing of false information is a misdemeanor subject to the penalties prescribed by section 1817 of the Tax Law and the Penal Law.

(6) The department has the right to review an exempt status granted to a person or organization and to request information pertaining to the purposes, activities, financial status and organizational structure. Failure to submit the information can result in the revocation of the exemption previously granted to the person or organization.

(7) An exempt organization certificate applies only to the organization which requested and was granted such exemption. The use of an exempt organization certificate by any person or any organization that was not issued the exemption is a misuse of such certificate. Such misuse can result in the revocation of the exempt status previously granted to the organization.

Example:

A national charitable organization applied for and was issued a numbered exempt organization certificate under the national organization's name. The national organization has chapters or affiliates located in New York State and allowed them to use its exemption certificate to make tax-free purchases. The chapters' or affiliates' use of the national organization-s exemption certificate is a misuse of such certificate. The Department of Taxation and Finance may properly revoke the exempt status previously granted to the national organization.

(8) The misuse within New York State of any tax exemption cards or other documents issued to diplomatic missions, diplomatic personnel and foreign government-owned enterprises or agencies shall be reported immediately to the United States Department of State or the American Institute in Taiwan.

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